Gujarat High Court
Ravi N Kapoor vs State Of Gujarat & on 27 November, 2014
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
R/SCR.A/809/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 809 of 2014
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RAVI N KAPOOR....Applicant(s)
Versus
STATE OF GUJARAT & 1....Respondent(s)
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Appearance:
MRS SANGEETA N PAHWA, ADVOCATE for the Applicant(s) No. 1
MR DEVANG VYAS, ADVOCATE for the Respondent(s) No. 2
MR LR PUJARI, APP for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 27/11/2014
ORAL ORDER
1. Rule returnable forthwith. Mr. Devang Vyas, the learned Additional Solicitor General of India waives service of notice of rule for and on behalf of the respondent no.2original complainant. Mr. Pujari, the learned APP, waives service of notice of rule for and on behalf of the respondent No.1State of Gujarat.
2. By this application under Article 227 of the Constitution of India, the petitioneroriginal accused No.8 seeks to challenge the order of process dated 4 th February, 2006, passed by the learned Additional Chief Metropolitan Magistrate, Ahmedabad in Criminal Case No. 6 of 2006. It appears that the Union of India Page 1 of 9 R/SCR.A/809/2014 ORDER through its officer serving in the Serious Fraud Investigation Office (SFIO), Ministry of Company Affairs, lodged a private complaint against the Maradia Chemicals Ltd. and its Directors. The petitioner herein is accused No.8 in the said complaint. The complaint was filed of the offence punishable under Sections 205A(8) of the Companies Act, 1956, regarding nontransfer of unpaid or unclaimed dividends to special account.
3. The learned Magistrate took cognizance of the complaint filed by the complainant, and ordered to issue process against the accused herein and other co accused of the offence under Section 205A (8) of the Companies Act. The proceedings, as on today, are pending in the Court of the learned Additional Chief Metropolitan Magistrate in the form of Criminal Case No. 6 of 2006.
4. I have heard Mr. Pahwa, the learned advocate appearing on behalf of the applicant, and Mr. Devang Vyas, the learned Additional Solicitor General of India, appearing for the respondent No.2original complainant.
5. It is not in dispute that the complaint was lodged for the contravention alleged to have been committed in the Financial Years 199293, 199394, 199495. Mr. Pahwa submitted that the only thing is that the nomenclature of account is different. According to him, "MCL Debenture Interest and Dividend Page 2 of 9 R/SCR.A/809/2014 ORDER Account, is the account for the purpose of unpaid dividends.
6. I do not propose to enter into the merits of his submission because this petition can be disposed of on a neat question of law.
7. Section 205A(8) reads as under: "205A(8) If a company fails to comply with any of the requirements of this section, the company and every officer of the company who is in default, shall be punishable with fine which may extend to five thousand rupees for every day during which the failure continues."
8. A bare reading of clause (8) to Section 205A would indicate that the default is punishable with fine which may extend to Rs.5000/ for every day during which the failure continues.
9. The contravention alleged are of the years 1992 93, 199394, 199495, whereas the complaint came to be lodged in the year 2006.
10. Section 468 of the Criminal Procedure Code provides that no Court shall take cognizance of an offence of the categories specified under subSection (2) after the expiry of the period of limitation.
11. Section 468(2) provides that the period of limitation shall be six months, if the offence is punishable with fine only.
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12. Thus, Section 205A (8) being punishable with fine only, the Court could have taken cognizance of the said offence within a period of six months. However it is sought to be argued by the other side that Section 205A (8) could be construed as a continuing offence, and being a continuing offence, the learned Magistrate was justified in taking cognizance even after a period of two decades.
13. Therefore, the only question that falls for my consideration is whether Section 205A (8) is a continuing offence.
14. An identical question fell for consideration before the Delhi High Court in the case of Webcity Infosys Ltd. Vs. Registar of Companies decided on 26th September, 2007 reported in 2007 (7) ILR (Del) 68. A learned Single Judge of the Delhi High Court, after elaborate discussion of law, held that Section 205A (8) cannot be termed as a continuing offence.
15. I may quote the relevant observations made by the learned Judge as under:
4. To decide the rival versions it would be relevant to note subsection (8) of Section 205A of the Companies Act. It reads as under: "205A. (8) If a company fails to comply with any of the requirements of the section, the company and every officer of the company who is in default, shall be punishable with fine Page 4 of 9 R/SCR.A/809/2014 ORDER which may extend to five thousand rupees for every day during which the failure continues."
5. Distinction between offences which take place when an act or remission is committed once for all and a continuing offence has been pithly drawn in the decision of the Supreme Court reported as AIR 1973 SC 908 State of Bihar vs. Deokaran Nenshi & Anr., 1973 CrLJ 347
6. In para 5 of the judgment it was opined as under: "5. Continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of those offences which arises out of a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with. On every occasion that such disobedience or non compliance occurs and recurs, there is the offence committed. The distinction between the two kinds of offences is between an act or omission which constitutes an offence once and for all and an act or omission which continues and therefore constitutes a fresh offence every time or occasion on which it continues. In the case of a continuing offence there is thus the ingredient of continuance of the offence which is absent in the case of an offence which takes place when act or omission is committed once and for all.
7. Their Lordships of the Supreme Court were considering regulation 3 of the Indian Metalliferous Mines Regulations and Section 66 of the Mines Act 1952. In para 9 of the report it was opined as under: "9. Reg.3 read with Section 66 of the Mines Act makes failure to furnish annual returns for the preceding year by the 21st of January of the succeeding year an offence. The Page 5 of 9 R/SCR.A/809/2014 ORDER language of Reg.3 clearly indicates that an owner, manager etc. of a mine would be liable to the penalty if he were to commit an infringement of the Regulation and that infringement consists in the failure to furnish returns on or before January 21 of the succeeding year. The infringement, therefore, occurs on January 21 of the relevant year and is complete on the owner failing to furnish the annual returns by that day. The Regulation does not lay down that the owner, manager etc. of the mine concerned would be guilty of an offence if he continues to carry on the mine without furnishing the returns or that the offence continues until the requirement of Reg.3 is complied with. In other words Reg.3 does not render a continued disobedience or noncompliance of it an offence. As in the case of a construction of a wall in violation of a rule or a byelaw of a local body, the offence would be complete once and for all as soon as such construction is made a default occurs in furnishing the returns by the prescribed date. There is nothing in Reg.3 or in any other provision in the Act or the Regulations which renders the continued noncompliance an offence until its requirement is carried out."
8. A Division Bench of the Calcutta High Court considered Section 162 of the Companies Act which deals with a failure to submit returns. Subsection (1) of Section 162 of the Companies Act reads as under: "162. Penalty and interpretation. (1) If a company fails to comply with any of the provisions contained in sections 159, 160 or 161, the company, and every officer of the company who is in default, shall be punishable with fine which may, extend to five hundred rupees for every day during which the default continues."
9. Suffice would it be to note that offence under Section162 of the Companies Act is a failure to submit a return. Further, the penalty is up to Rs.500/ for every day during which the default continues.
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10. Contrasted with the language of sub section (8) of Section 205 of the Companies Act, it be noted that the 2 provisions are pari materia. Only difference being that word used in subsection (1) of Section 162 is 'default' and the word used in subsection (8) of Section 205A of the Companies Act is 'failure'.
11. Interpreting Section 162 of the Companies Act, in para 14 of the decision of the Division Bench of the Calcutta High Court reported as 1984 Tax L.R. 2043 National Cotton Mills Ltd. vs. Assistant Registrar of Companies, it was held as under: "14. On a careful review of the legal position, it is difficult for us to agree with the view expressed by a learned single Judge in the above case. As pointed out by the Supreme Court, in order to constitute a continuing offence, the offence must arise out of a failure to obey or comply with a rule or its requirement and which involves a penalty, the liability for which continues until the rule or its requirement is obeyed or complied with. Section 150 of the Companies Act does not impose any liability which so continues. The offence on the breach thereof is complete with the failure to furnish the return in the manner or within the time stipulated.
Such an offence is committed once and for all as and when one commits the default. That provision does not contemplate that the obligation to submit such returns continues from day to day until the return is actually submitted nor does it provide that continuance of business without filling of such returns is prohibited so that nonfulfillment of a continuing obligation or continuing of business without filing of such returns becomes a continuing offence. When Section 162 of the Companies Act prescribed the penalty of fine 'which may extend to fifty rupees for Page 7 of 9 R/SCR.A/809/2014 ORDER every day during which the default continues', it merely prescribed the measure of penalty - such a prescription being made with the object of enforcing strict compliance with the requirement of Section 159 under the threat of enhanced penalty and getting relief from such penalty on enhancing scale by early submission of returns even after the default. That does not render the initial default a continuous one. It cannot be said that the offence is repeated or committed from day to day after the initial default. It is only where the offence is committed from day to day that it can be called a continuing offence. There being no express provision in Section 234, 598 etc. of the Companies Act it will not be proper to hold that the offence under Section 162 is a continuing offence. When the statute itself provides for continuance of offence irrespective of initial default in some cases but does not make similar provisions in respect of some other offences, it would not be correct to say that the latter class of cases also would be continuing offences.
12. I note that the Division Bench of Calcutta High Court based its decision and heavily relied upon the decision of the Supreme Court in Deokaran Nanshi's case (supra).
13. Thus, there is no need for me to explain any further save and except to record that the logical conclusion of following the ratio of law declared in Deokaran Nanshi's case (supra) as followed and elaborated by the Division Bench of the Calcutta High Court in National Cotton Mills' case (supra) requires this Court to hold that offence under Section 205A of the Companies Act, as punishable under sub section (8) thereof, is not a continuing offence. The offence arises out of a failure to obey or comply with the rule and involves a penalty. The liability may continue until the requirement is obeyed or complied with. It is not a case where the offence is repeated or committed from dayto day after the initial default."
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16. I am in respectful agreement with the view taken by the learned Single Judge of the Delhi High Court and I propose to follow the same.
17. In the aforesaid view of the matter, I have no hesitation in coming to the conclusion that the learned Magistrate could not have taken cognizance after the expiry of the period of limitation as provided under Section 468 of the Code of Criminal Procedure.
18. In the result, this application is allowed the proceedings of Criminal Case No. 6 of 2006, pending in the Court of the learned Additional Chief Metropolitan Magistrate, are hereby ordered to be quashed, so far as it relates to the applicants. Rule is made absolute. Direct service is permitted.
(J.B.PARDIWALA, J.) Manoj Page 9 of 9